The viability of the Alupuram smelter of Indal Ltd might come under scrutiny owing to higher power costs. A tariff hike by the Kerala State Electricity Board (KSEB) six months back has rendered products of the Alupuram smelter uncompetitive.
However, the Indal management has entered into talks with the Kerala government for purchasing power at concessional rates. If talks fail, the unit will face mounting losses as power is a major input in smelting operations for aluminium.
"The Alupuram plant has turned unviable following successive power tariff hikes," explained top group sources.
However, the executive declined to comment when asked on the possibility of the unit being closed down. Indal workers fear the unit may be closed down and its employees offered voluntary retirement scheme if the plant is unable to manufacture at competitive rates.
KSEB has been raising power tariff every year and the last round of tariff hike has made the unit uncompetitive in cost terms against products from other units.
Meanwhile, the management of Indal, a subsidiary of the A V Birla group major Hindalco, has proposed wide ranging shopfloor level restructuring at its refractory unit at Kalwa. The restructuring exercise at the Kalwa unit include flexibility of job profiles and multi-scaling.
With refractory prices down, the unit has been under pressure for some time. The management was yet to come out with plans to turn the unit around.
In another development, Orissa Extrusions Ltd, another subsidiary of Indal, was handed a winding-up notice by the Board for Industrial Finance and Reconstruction (BIFR). Indal was trying to find a buyer for the unit and two have been shortlisted. Indal sources refused to name them, but said talks were on. Indal had earlier floated a letter of intent for a joint venture partner.
Indal registered a Rs 1,421 crore gross turnover in 2000-01 against Rs 1,174 crore in the previous year. The company reported a Rs 261 crore operating profit against Rs 196 crore achieved in the previous year. This translated into a profit before tax figure of Rs 152 crore in 2000-01 against Rs 98 crore in the previous period. Net profits on the other hand were Rs 116 crore against Rs 83 crore in 1999-2000.
